Thai Union Frozen Products Public Company Limited (TUF) has just recently announced that it has already obtained approval from the Office of Fair Trading (OFT) of the United Kingdom (UK) on the acquisition of MW Brands, holders of major European tuna labels, John West, Petite Navire and others. According to an official statement, TUF management is confident that the transaction can be completed by the end of October.
Mr. Thiraphong Chansiri, president of TUF, said, “TUF has gained approval from the Fair Trading Office of the UK on the acquisition. This is the last condition for completing this transaction. Therefore, we are ready to close the deal as all conditions precedents have been met, namely the approval of the acquisition and consequent equity raising at the extra general shareholders’ meeting. It is an important achievement in my corporate history. It will not just be the largest cross border acquisition our company has ever made, but also the largest transaction ever for us, with the transaction value worth Bt 28 billion (around USD 930 million). We are certain that the deal could be closed by the end of Octoberâ€.
The company has earlier made the request to the Office of Fair Trading for approval of the acquisition on a voluntary basis. This was to ensure that the transaction will not incur any anti-trust issue in terms of fair competition, in the future. The Office of Fair Trading is a UK government office which ensures fair competition within any industry and protection of consumer rights.
Mr. Chansiri added, “With regards to our plan of equity raising, it involves a rights-offering (RO) to existing shareholders and a private placement. The RO will allow existing shareholders to subscribe to 1 new share per 20 of their existing shares at a price of Bt 50 (USD 1.66) per share. The XR date was already past while the shareholders’ response has been highly positive. The subscription period for RO will be between October 11 and 15. On the private placement, we have done a few road shows to visit existing and potential investors, local and abroad, to explain our rationale of the investment and support our equity raising. The investors’ responses have been highly encouraging so far. The book-building for the pricing and allocation of the private placement will be done on October 18-20 while subscription will be on October 21-22. The new shares will be allowed for trading on October 29.â€
He further stressed, “The increase in equity should not dilute the earning per share (EPS) to existing investors given the acquisition. We believe the amount of new equity injection is appropriate as potential dilution to existing shareholders should only be 9%. After all, we are confident that the new capital structure is optimal for the transaction and beneficial to the company in the long term as it will reduce TUF’s debt / equity ratio.â€
The acquisition will allow TUF to be a global canned tuna player, with the ability to leverage on its supply chain which would source fish from all major fishing grounds around the world, namely the Western Pacific, Eastern Atlantic and the Indian Ocean. Moreover, the company’s production base will cover all major canned tuna producing and exporting markets, namely South East Asia, the US, Africa and Europe. In terms of the market coverage, its geographic spread will be enlarged and become more diversified.
According to the company, after the acquisition, projected sales contribution from the US will drop to 38% while that of Europe 31% and the rest of the world 31%: “The more balanced portfolio will ensure less disruption from any business shock in any single market. Sharing business intelligence between subsidiaries around the world will be another added advantage to the companyâ€, stated TUF. The management expects a fair amount of synergistic benefits to be realized once it starts to integrate with MW Brands.
Mr. Chansiri concluded, “This transaction will be beneficial to the group and allows us to further explore the European market, which is considered the largest collective market for canned seafood, with the ownership of leading brands of the region. As a result, we are confident that we can achieve group sales amounting to USD 3 billion within next year, which would be sooner than our previous expectation. Now, we decided to set a new sales target that TUF should reach sales worth USD 4 billion by the end of 2015.â€
